The BPF presented a picture of improving profitability and optimism in the UK plastics sector at a meeting between its Council and senior Bank of England officials held at the Bank yesterday. Deputy Governor, Charlie Bean, and the Bank's Agent for Greater London,Peter Andrews,heard that some 71% of the respondents to the latest survey are forecasting an increase in UK sales turnover over the next 12 months, a considerable increase on the 54% reported in the January survey.
Peter Davis, BPF's Director General said “Our survey attracted 64 responses and exuded a UK Plastics Industry which is confident about business trends over the next twelve months in both sales and profitability, helped by more stability in raw materials availability and cost.”
Of those predicting a turnover increase:23% expected sales to increase by 2-5%; 21% forecast an increase of 6-10%; 16% forecast an increase of 11-20%; and 9% expected rises of over 21%.
24% expected no growth and only 5% a decrease. The most positive sectors were: Moulders; Polymer Producers and Recyclers.
Over the past year 64% of respondents said their profit margin had increased because of: new products and projects; management and cost efficiencies; reduced material costs. 15% had no change in their profit margin and 31% experienced a decrease due to: Government/NHS cutbacks; increased raw material, energy and labour costs.
Looking ahead twelve months more respondents 48% were expecting no change in their profit margin. 45% were expecting their profit margins to increase: 21% expected their profit margin to increase by 1-5%; 16% by 6-10%; 8% by 11-20%.Reasons cited for the expected increases were: cost reduction; greater production efficiency and volume growth. 7% expected a decrease over the next twelve months.
Peter Davis said “Plastics companies have had to focus their minds on reducing cost and increasing efficiency.”
On staffing, 53% of respondents did not plan to increase staff in the next twelve months.This is more than the January survey (45%). 35% were planning to increase staff and 12% will reduce staff.
Of the 61% of respondents who export most expect Western. European sales to be unchanged but many expected an increase. By contrast few expected business in Eastern Europe to increase. A satisfyingly large number of respondents were active in markets outside of Europe and North America, South America and Africa to increase over the next twelve months.
Peter Davis said “Europe is a big market but growth prospects are poor. It’s good to see many companies seeking business in overseas growth markets.”
84% of respondents were not having difficulties getting supplies of plastics raw materials and additives. This is a big change on our June 2011 survey when 42% were not having difficulties. It shows supply difficulties have eased.
Respondents were asked if they were experiencing price increases or decreases. 26% were experiencing increases, 49% no change, 25% decreases.Many mentioned volatility in the marketplace. This is a substantial change from our June 2011 survey where all respondents were experiencing substantial price increases.
47% of respondents planned to invest a little in plant and equipment over the next twelve months,whereas 31% will invest significantly. Moulders and Composite firms were evident in the latter. 22% plan no investments.
BPF President Philip Watkins, who chaired the meeting, said "It was a good discussion on business trends and valuable for the Bank and the BIS officials who also attended to hear directly from our members their experiences in the markets we supply and on the availability of finance. Supplying into all manufacturing sectors, the Plastics industry is a key indicator of the state of the manufacturing economy and we were able to provide expert commentary on conditions in diverse areas such as the buoyant Automotive sector and the more hard pressed construction sector."